Table Of Contents
  • List of Best SIP Mutual Funds to Invest
  • What are the Best SIP Mutual Funds?
  • Who Should Consider Investing in the Best SIP Mutual Funds?
  • Frequently Asked Questions
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Best SIP Mutual Funds

SIP refers to an investment of a predetermined amount of money at predetermined intervals, either monthly or quarterly, in a specific mutual fund scheme. Rather than investing in a massive chunk at a time, you make investments in smaller amounts at regular intervals of time. 

List of Best SIP Mutual Funds to Invest

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What are the Best SIP Mutual Funds?

The best SIP mutual funds have the best SIP returns over the trailing three and five-year periods. Since SIP is a long-term investment approach, it makes sense to select the best SIP funds based on how they have performed over longer periods. 

Most of the best SIP mutual funds are from the high-risk equity mutual funds category. They are meant for a long-term investment and can be significantly volatile in the short term. Many popular smallcap, midcap, and flexi-cap mutual funds are part of the list of best SIP mutual funds.

Who Should Consider Investing in the Best SIP Mutual Funds?

SIP mutual funds enable investors to build wealth by investing small amounts regularly without stretching their financial budget. The following are the categories of investors who can invest in these funds:

New Investors: Although SIP mutual fund investing applies to all investors, it is an ideal option for new mutual fund investors.  The new investors usually have long-term investment horizons and high-risk appetites, allowing them to stay invested for an extensive period and earn their expected returns.

Investors with Long Term Investment Horizon: SIPs are an ideal investment tool for investors with a long-term investment horizon, as they offer higher returns over a long duration. In addition, it helps investors achieve their investment goals over the period.

Investors Nearing Retirement Age: Investors nearing retirement age and seeking alternative income sources can opt for the best SIP mutual funds. They can also opt for a Systematic Withdrawal Plan (SWP) to automate the withdrawal process, ensuring a stable income upon retirement. 

Frequently Asked Questions

Is SIP mutual fund a better option than fixed deposits?

Yes, SIP mutual funds are a better option than traditional fixed deposits, as the SIPs offer higher returns in the long term. However, these funds are more volatile in the short term. Hence, investors with long-term investment horizons and risk tolerance must invest in these funds.

Which are the best SIP mutual funds?

The following are some of the best SIP mutual funds:

  • Quant Small Cap Fund Growth Option Direct Plan
  • Nippon India Small Cap Fund-Direct Plan-Growth Plan
  • HSBC Small Cap Fund Fund Direct Growth
  • Nippon India Growth Fund-Direct Plan-Growth
  • HDFC Small Cap Fund-Direct Growth Option

Are SIP mutual funds taxable?

Yes, SIP mutual funds are taxable. The SIP mutual funds are taxed in the following two categories:

  • LTCG: Investing in the funds for a year or more is termed long-term capital gains (LTCG) and is taxed at 12.5% if your gains are more than Rs. 1,00,000. However, gains up to Rs. 1,00,000 are tax-free. 
  • STCG: Investing in these funds for less than a year is taxed at 20%

Is SIP mutual funds risk-free?

No, investing in mutual funds using SIPs is not risk-free like other investment options. However, SIPs can mitigate risks by enabling investors to invest small amounts regularly over a long-term duration, averaging the overall investment cost.

What is the return rate of SIP mutual funds?

The SIP mutual funds offer a 5-year return as high as 35.34%. In addition, the 3-year return of these funds is 46.61%.

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